When many people want to start investing, they have basic question like where should I start, what are the Investment options , Even though there are multiple investment options people always confuse where to invest,
But to start investment we need to have idea on time span of our Investment. Below I am mentioning four categories for Investment options based on time horizon.
When the Investment horizon is so short like 3 to 6 months, the focus should be on capital protection and liquidity not on returns. For short term the other option could be liquid funds,arbitrage funds and ultra short duration debt funds.
When the Investment horizon is 1-2 years it will be considered as short term, for short term you can consider corporate fixed deposits, where interest rates are slightly higher than what banks offer. Arbitrage funds are useful if your holding period is 1–2 years and gains upto 1 lakh will be tax free.
When the investment horizon is 3 -5 years it will be considered as Medium term, you can consider dynamic bond funds, If you can hold for complete five years you can consider options like Post office schemes such as National Saving Certificate , these schemes offer higher interest compared to bank deposit and safe.
When the investment horizon is more than 6 years , it will be considered as Long term, If you are as conservative Investor then the safest option will be PPF/RBI Savings Bonds , But if you are risk taker and have longer duration you can go consider equity mutual funds /Index funds.
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Source: The Economic Times Wealth Report
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